LAKEWOOD RANCH'S SMR SUED

Published: Saturday, March 16, 2013 at 1:00 a.m.

Last Modified: Friday, March 15, 2013 at 8:17 p.m.

Home buyers left high, dry and angry by bankrupt Paradise Homes filed a lawsuit Friday against the master developer of Lakewood Ranch.

Facts

BURNED BUYERS:

Defunct Paradise Homes had developer's OK, they say

Buyers contend that Schroeder-Manatee Ranch and its LWR Communities affiliate failed to properly vet Paradise's ability and did not monitor its financial health, according to the Manatee County Circuit Court lawsuit.

Since its debut in 1995, Lakewood Ranch has maintained a list of approved builders, which developer SMR maintains are carefully selected. Paradise, which built primarily in the Country Club East neighborhood there, was one of 16 that list.

"We have been attempting for three months to reach a negotiated settlement with SMR," said Sarasota attorney Alan Tannenbaum, who is representing the plaintiffs. "We had no choice but to file the suit. We hope they will take responsibility and step up to the plate to make these folks whole."

Several Paradise buyers claimed the company failed to finish homes that were paid for prior to filing for bankruptcy protection from creditors last year.

Daniel J. Perka, SMR's general counsel, said Paradise Homes is to blame for the plaintiffs' woes.

"Jim Butler and the other executives of Paradise Homes are responsible for the mismanagement and bankruptcy of that company, not SMR," according to a statement Perka released Friday.

"Paradise Homes continually misled and deceived many people -- their own customers, subcontractors, financial institutions, as well as SMR," Perka said.

SMR also said it is not directly liable for the plaintiffs' damages.

"These customers entered into contracts with Paradise Homes, not with SMR," Perka said. "SMR has had discussions with Paradise customers to determine if there are ways that SMR can assist them. But SMR is not financially responsible."

The plaintiffs include five individuals and 17 married couples who visited an onsite sales center or Lakewood Ranch's website.

Tannenbaum said Paradise was "pushed" on home buyers by SMR as a builder "of the highest integrity and financial strength."

Paradise began building in Country Club East in February 2010, and quickly became a sales leader there.

But, Tannenbaum contends, Paradise lacked experience and financial wherewithal. He also alleges that Butler, Paradise's president, funneled money into the Viking Culinary Center, a now-defunct cooking school in Lakewood Ranch that rented space from SMR.

"All this time, SMR kept the company on the website as a preferred, approved builder," Tannenbaum said.

<p>Home buyers left high, dry and angry by bankrupt Paradise Homes filed a lawsuit Friday against the master developer of Lakewood Ranch.</p><p>Buyers contend that Schroeder-Manatee Ranch and its LWR Communities affiliate failed to properly vet Paradise's ability and did not monitor its financial health, according to the Manatee County Circuit Court lawsuit.</p><p>Since its debut in 1995, Lakewood Ranch has maintained a list of approved builders, which developer SMR maintains are carefully selected. Paradise, which built primarily in the Country Club East neighborhood there, was one of 16 that list.</p><p>"We have been attempting for three months to reach a negotiated settlement with SMR," said Sarasota attorney Alan Tannenbaum, who is representing the plaintiffs. "We had no choice but to file the suit. We hope they will take responsibility and step up to the plate to make these folks whole."</p><p>Several Paradise buyers claimed the company failed to finish homes that were paid for prior to filing for bankruptcy protection from creditors last year.</p><p>The plaintiffs' lawsuit also claims that SMR and LWR violated Florida's Deceptive and Unfair Trade Practices Act by misrepresenting Paradise's ability, experience and financial condition.</p><p>Daniel J. Perka, SMR's general counsel, said Paradise Homes is to blame for the plaintiffs' woes.</p><p>"Jim Butler and the other executives of Paradise Homes are responsible for the mismanagement and bankruptcy of that company, not SMR," according to a statement Perka released Friday.</p><p>"Paradise Homes continually misled and deceived many people -- their own customers, subcontractors, financial institutions, as well as SMR," Perka said.</p><p>SMR also said it is not directly liable for the plaintiffs' damages.</p><p>"These customers entered into contracts with Paradise Homes, not with SMR," Perka said. "SMR has had discussions with Paradise customers to determine if there are ways that SMR can assist them. But SMR is not financially responsible."</p><p>The plaintiffs include five individuals and 17 married couples who visited an onsite sales center or Lakewood Ranch's website.</p><p>Tannenbaum said Paradise was "pushed" on home buyers by SMR as a builder "of the highest integrity and financial strength."</p><p>Paradise began building in Country Club East in February 2010, and quickly became a sales leader there.</p><p>But, Tannenbaum contends, Paradise lacked experience and financial wherewithal. He also alleges that Butler, Paradise's president, funneled money into the Viking Culinary Center, a now-defunct cooking school in Lakewood Ranch that rented space from SMR.</p><p>"All this time, SMR kept the company on the website as a preferred, approved builder," Tannenbaum said.</p><p>Paradise was, "in essence, a mere startup company," the suit alleges.</p><p>Paradise filed for Chapter 7 bankruptcy in October, leaving a trail of partially completed houses and vacant lots.</p><p>Tannenbaum said his clients suffered "millions in losses" and liens from unpaid contractors and materials suppliers, extra interest payments and finance charges and additional costs of completion.</p><p>The lawsuit represents a rare dent in the reputation of Lakewood Ranch, which is a national model for master-planned and mixed-use communities.</p><p>With 8,500 acres, it is the dominant force in regional real estate, ranking No. 9 on a recent list of the top-selling communities in the nation. It has more than 8,000 houses and condominium units.</p><p>"It does taint them a bit," said builder John King, of Rampart Homes, who does not build at Lakewood Ranch. "When you buy at SMR, you think you are buying into a safe environment."</p><p>Jim Soda, a Realtor with Keller Williams in Lakewood Ranch, has one client whose Paradise home was about 80 percent complete.</p><p>"What happens with builders like Paradise ... is all of the sudden they get more business than they can handle, and that leads to problems with cash flow," he said.</p><p>Staff writer John Hielscher contributed to this report.</p>